OPERATIONS MANAGEMENT

ON

ENHANCING PRODUCTIVITY IN TELECOM SERVICES THROUGH OPERATIONS MANAGEMENT

Contents

1. PRODUCTIVITY:...............................................................................................................3

2. PRODUCTIVITY MEASUREMENT:................................................................................4

3. COMPETITIVENESS VERSUS PRODUCTIVITY:..........................................................5

4. BRIEF HISTORY OF INDIAN TELECOM SECTOR:......................................................5

5. ANALYZING TELECOM SECTOR IN INDIA:................................................................6

6. KEY TERMS:......................................................................................................................7

7. ANALYSIS OF INDIAN TELECOM MARKET:..............................................................9

8. CATEGORY WISE EVALUATION OF TELECOM SERVICES:..................................10

9. SIGNIFICANCE OF ARPU :............................................................................................13

10. ENHANCING PRODUCTIVITY:....................................................................................13

Outsourcing..............................................................................................................................15

Infrastructure Sharing – Partnership among Competitors.........................................................16

Value-added service likely to develop into a significant revenue stream:.................................17

Mobile Number Portability (MNP) – An opportunity in disguise?...........................................18

Safeguarding Income Streams to Enhance Efficiency..............................................................19

Mergers and Acquisitions – Acquiring Competition.................................................................19

Services-Importance:................................................................................................................19

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11. CONCLUSION:.................................................................................................................21

OBJECTIVES: -

To study and understand the productivity of Telecom Services in India through Operations Management.

To identify the future challenges facing this sector. To provide solutions to enhance productivity in view of modern

challenges.

1. PRODUCTIVITY:

Productivity in economics is the ratio of what is produced to what is required to produce. Productivity is the measure on production efficiency. While productivity is the amount of output produced relative to the amount of resources (time and money) that go into the production, efficiency is the value of output relative to the cost of inputs used. Productivity improves when the quantity of output increases relative to the quantity of input. Efficiency improves, when the cost of inputs used is reduced relative the value of output. A change in the price of inputs might lead a firm to change the mix of inputs used, in order to reduce the cost of inputs used, and improve efficiency, without actually increasing the quantity of output relative the quantity of inputs. A change in technology, however, might allow a firm to increase output with a given quantity of inputs, such an increase in productivity would be more technically efficient, but might not reflect any change in efficiency. Companies can increase productivity in a variety of ways. The most obvious methods involve automation and computerization which minimize the tasks that must be performed by employees.Labour productivity is generally speaking held to be the same as the “average product of labour” (average output per worker or per worker-hour, an output which could be measured in physical terms or in price terms).However, some aspects of labour productivity may be very difficult to measure exactly, or in an unbiased way, such as:• The intensity of labour-effort, and the quality of labour effort generally;• The creative activity involved in producing technical innovations;• The relative efficiency gains resulting from different systems of management, organization, co-ordination or engineering;

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• The productive effects of some forms of labour on other forms of labour.

One important reason is that these aspects of productivity refer mainly to its qualitative, rather than quantitative and dimensions.

2. PRODUCTIVITY MEASUREMENT :

Productivity is the relationship between output of goods and services and the inputs of resources used in the production process, with the relationship usually expressed in ratio form. Productivity measures are sub-divided into partial and total factor or multi-factor productivity measures. The former are defined as the relationship between output and one input, such as labour or capital, while the latter represents the relationship between output and an index of two or more inputs.

Productivity is determined by a number of factors, including the quality and availability of natural resources, industrial structure and inter-sectors shifts, capital accumulation, the rate of technological progress, quality of human resources, the macroeconomic environment, and the microeconomic environment. The production function depicts production performance and productivity is the measure of it. By help of the production function, it is possible to describe simply the mechanism of economic growth. Economic growth is a production increase achieved by an economic community. It is usually expressed as an annual growth percentage depicting (real) growth of the national product. Economic growth is created by two factors: increase in production input and an increase in productivity. Accordingly, an increase in productivity is characterized by a shift of the production function and a consequent change to the output/input relation.The formula of total productivity is

Productivity = Output Q/ Input Q Q = quantity

According to this formula, changes in input and output have to be measured inclusive of both quantitative and qualitative changes. In practice, quantitative and qualitative changes take place when relative quantities and relative prices of different input and output factors alter. In order to

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accentuate qualitative changes in output and input, the formula of total productivity shall be written as follows Productivity = Output Q and Quality/ Input Q and quality

3. COMPETITIVENESS VERSUS PRODUCTIVITY:

The concept of productivity is increasingly being recognized as more pertinent than competitiveness. Indeed, some economists argue that the whole notion of a "competitive nation" should be abandoned as a term having much meaning for economic prosperity. The ability to do so depends not on the amorphous notion of "competitiveness" but on the productivity with which a nation's resources (labor and capital) are employed. Thus the only meaningful concept of competitiveness at the national level is national productivity.

From the point of view of management functions there should be productivity of decision, planning, organizing, coordinating and controlling. Also, from the management roles concept there should be productivity in ten roles for managers and entrepreneurs which should be adapted to small and medium enterprises.From the point of view of executive function of the small and medium enterprises, productivity should be focusing mainly on production and commercial functions, because other functions may be at minimum level or externalized (such as personnel, financial and accountability, research and development). Productivity Prevision/ Planning

Productivity Control& Pursuit Organizing for Productivity

Productivity Evaluation& Decision

Productivity Coordination

Managerial functions connections for productivity

4. BRIEF HISTORY OF INDIAN TELECOM SECTOR:

The Indian telecom industry has come a long way in achieving its dream of providing affordable and effective communication services to its customers. In the last decade, India has

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become a major base for the telecom industry worldwide enabling Indian telecom companies to become truly global players. The Indian telecom sector has gone through many phases of growth and diversification. Starting from telegraphic and telephonic systems in the 19 th century, the field of telephonic communication has now expanded to make use of advanced technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile phones.

India, supported by its strong economic growth, represents one of the fastest growing consumer markets in the world. The fundamental forces of long term economic growth such as demographics, urbanization, and rising education levels are affecting growth in Indian incomes resulting in increasing spending power, which translates into growing household consumption. The Indian consumer market is set to scale new heights. According to a study by McKinsey Global Institute on the rise of India’s Consumer Market in May 2007, India will climb from its position as the twelfth-largest consumer market today to become the world's fifth-largest consumer market by 2025. Aligning with the growing potential of consumer market in India, the Indian telecom sector has experienced a tremendous growth in the last few years

According to a recent study by Gartner, the tot al cellular services revenue in India is projected to grow at a Compound Annual Growth Rate (CAGR) of 18 percent from 2008-2012 to exceed USD 37 billion, with more than 737 million mobile connections by 2012, growing at a CAGR of 21 percent in the same period. India along with other BRIC (Brazil, Russia, India and China) countries is likely to become home for over 1.7 billion mobile users by 2012. As per a recent study by Gartner , in the next 4 years, cellular market penetration in India would increase 4 to 60.7 percent from 19.8 percent last year.

5. ANALYZING TELECOM SECTOR IN INDIA:

Mobile subscribers: 391 million

Land lines: 40 million

April 2009 added subscribers: 15.64 million

Annual net ads (mobile): 113.26 million

Monthly average mobile subscribers: 15.41 million

Penetration: 37%

Projected cellular penetration: 500 million by 2010 (40%)

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Broad band connections: 6.22 million

India’s current main operators fit in to four main categories:

State owns operators: BSNL, which covers 20 circles and MTNL which offers mobile services and in the remaining two circles of Mumbai and Delhi it offers GSM services.

The original private service providers with a national presence: Bharati airtel and Vodafone Essar

Those who took fourth round licenses to create a national presence : reliance communications, Tata tele services, idea cellular, sistema shyam, aircel limited

Green field operators issued new licenses in January 2008: Datacomm solutions, Loop telecom, S tel , unitech, swan telecom.

6. KEY TERMS:

ARPU (Average Revenue Per User)-

A measure of the revenue generated per user or unit. Average revenue per unit allows for the analysis of a company's revenue generation and growth at the per-unit level, which can help investors to identify which products are high or low revenue-generators. This measure is most often used in the telecommunications sector to survey the amount of revenue generated per cell-phone user, for example. The values of the measures obtained can be used as a comparison between companies. Companies may also use this information to determine which product lines are lagging. 

AMPU (Average Margin Per User) -

It is a widely used metric for gauging the success of businesses in the telecommunications industry. Average margin per user (AMPU) measures the margin made by the firm from each customer, typically measured as the revenue minus the costs and divided by the number of users. Although most telecommunications-industry analysts and firms use average revenue per user (ARPU) as a profitability indicator, AMPU is arguably a more reliable metric of a firm's profitability. By breaking down customer sales by margin rather than by revenue, companies that

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have lower sales volumes but create larger margins can be considered more efficient and arguably more profitable than their high-volume competitors.

RPU (Revenue per User) –

A ratio used to express the profitability of a company on a per-user basis. RPUs are calculated by taking overall revenue and dividing by total number of users:

This ratio is mainly used by service providers, such as telephone providers. This measure helps companies to uncover deficiencies and plan strategies for growth. RPU also helps the company determine which product or service lines produce the most revenue per customer and, therefore, which customer relationships are the most important.

MOU (minutes of usage)-

 MOU is the total time, measured in minutes that a customer uses his or her mobile phone during a day, month, or year.

GSM –

Global System for Mobile communications is the most popular standard for mobile phones in the world. Its promoter, the GSM Association, estimates that 80% of the global mobile market uses the standard.[1] GSM is used by over 3 billion people across more than 212 countries and territories.[2][3] Its ubiquity makes international roaming very common between mobile phone operators, enabling subscribers to use their phones in many parts of the world.

3G-

International Mobile Telecommunications-2000 (IMT-2000), better known as 3G or 3rd Generation, is a family of standards for mobile telecommunications defined by the International Telecommunication Union,[1] which includes GSM EDGE, UMTS, and CDMA2000 as well as DECT and WiFi. Services include wide-area wireless voice telephone, video calls, and wireless data, all in a mobile environment. Compared to 2G and 2.5G services, 3G allows

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simultaneous use of speech and data services and higher data rates (up to 14.0 Mbit/s on the downlink and 5.8 Mbit/s on the uplink with HSPA+). Thus, 3G networks enable network operators to offer users a wider range of more advanced services while achieving greater network capacity through improved spectral efficiency.

VAS (value added services) –

A value-added service (VAS) is popular as a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. On a conceptual level, value-added services add value to the standard service offering, spurring the subscriber to use their phone more and allowing the operator to drive up their ARPU. For mobile phones, while technologies like SMS, MMS and GPRS are usually considered value-added services, a distinction may also be made between standard (peer-to-peer) content and premium-charged content.

7. ANALYSIS OF INDIAN TELECOM MARKET:

The telecom industry in India boasted of the highest mobile usage in the world, nearing around 500 minutes per subscriber per month, with some of the lowest mobile t ariffs and ARPUs in the world, resulting in reducing the profit margins. The telecom operators are continuously striving to manage the reducing margins. It can be seen from the trends, why telecom companies are typically focusing on the following aspects to manage their operating margins:

• Increasing tele-density• Optimizing operating costs

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• Increasing customer focus and managing the churn rate• Infrastructure sharing• Diversification of telecom services.

In their continuous endeavor to manage the reducing margins, telecom companies have been taking steps to reduce their operating costs and increase their revenues. Business Process Outsourcing, Infrastructure Sharing, IT Outsourcing and Revenue Assurance are some of the significant steps which telecom companies have taken to reduce their operating costs along with diversification of telecom services, increasing the network coverage area, focusing on customer satisfaction to increase the subscriber base, and hence revenues.

The Indian telecom market can be characterized by reducing Average Revenue Per Use (ARPU), low tele-density, falling tariff rates and increasing Minutes of Use (MoU). With a subscriber base of over 260 million, the industry operates at an ARPU as low as 264 (INR / Sub / Month) for GSM subscribers and 159 for CDMA subscribers. Also, the MOU for the telecom subscribers has increased from 471 in March 2007 to 493 in March 2008 reporting a percentage growth of 4.67.

8. CATEGORY WISE EVALUATION OF TELECOM SERVICES:

The Indian telecom regulatory body TRAI has released a quarterly report on the statistics and performance of service providers in the telecommunications and internet markets. The report for April-May-June i

PCOs Vanishing?

The humble STD booth is disappearing from the face of India. The total number of Public Call Offices (PCOs) in the country as on 30th June 2009 was 61,13,423, showing a reduction of

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88,018 PCOs from the previous quarter.  In the March quarter, the number of PCOs had actually risen from 5.98 million to 6.2 million.  Private operators own 66.7% of the market while BSNL’s share is 29.9% and MTNL’s 3.4%.

Village Public Telephones

3,798 VPTs were added in the June quarter, increasing the total to 5,64,337.

Rural Versus Urban

Bharti Airtel has the maximum rural subscribers with 33.78 million, followed by Vodafone with BSNL’s 29.64 million and Reliance with 16.36 million. Rural teledensity reached 16.61% and urban teledensity was 95.05% at the end of June-09. BSNL/MTNL, the PSU operators own 86.2% of the market share. Rural wireless subscribers rose to 125.95 Million in June 2009.

Landlines

After plateauing for two consecutive quarters at 3.27%, teledensity of landlines in the country is down to 3.22% from 3.38% in June 2008. Surprisingly, rural wireline subscription has been declining at a faster rate than urban. Landline additions have been seen only in Delhi, Mumbai, Chennai & UP(W). The two PSUs BSNL/MTNL, which together own the majority market share, lost a total of 0.57 million subscribers in the quarter.

Performance has deteriorated in the June quarter as compared to the previous quarter in terms of faults incidences, metering & billing credibility, response time/ percentage of calls answered by the operator,  the report notes. In fault incidences per 100 subscribers per month - BSNL, MTNL, Bharti and HFCL did not meet benchmarks while Tata Indicom and Reliance Communications fell behind in metering and billing.

Metrics of Wireless Industry

GSM

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Average Revenue Per User (ARPU) declined by 10% to Rs. 185 in June, primarily due to the prepaid segment, where ARPU fell from Rs. 181 in March to Rs. 162 in June. Postpaid ARPU dropped negligibly to Rs. 539 in June.

Minutes of Use (MOU) per subscriber continued to show a declining trend, falling by 6.19% to 454 minutes in June. Outgoing MOUs declined by 5.30% and incoming by 7.04%.

Postpaid MOU fell by 1.53% and pre-paid by 5.68%. Outgoing SMS per subscriber decreased from 30 in Mar-09 to 28 in Jun-09. All India blended average outgo per minute was Rs. 0.74 in June-09.

GSM is growing at 2.53 times the CDMA telecom industry and as of June, GSM subscribers constituted 77% of the wireless market.

CDMA All India blended ARPU for postpaid increased to Rs. 396 while that of prepaid fell to

Rs. 69 in June-09. The total MOU per subscriber is now 342 minutes. Outgoing MOU dropped by 2.7% to 160 minutes; incoming MOU by 5.2% to 182

minutes. SMS usage increased to 11 in June-09. All India blended average outgo per minute for CDMA slid to Rs. 0.56 in June-09.

Revenues from Telcos Fell

There was a 3.3% reduction in gross revenues reported by telcos to Rs 39,108.33 crores in the June quarter; adjusted gross revenue rose marginally.

More Calls Dropped, Poorer Response Times To Consumers & Resolution

The performance of the wireless service providers has improved in some portions, just met the benchmarks in others. Compared to the previous quarter, it has degraded when it comes to:

Call set-up success rate (within operator’s own network) - Bharti is having trouble in Karnataka, Bihar and North East

Call drop rate -Vodafone in Madhya Pradesh

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Response time to the customer for assistance, especially the calls answered (voice to voice) by the operator - almost all of them: BSNL, MTNL,Tata Teleservices (Indicom), Idea Cellular, RTL, RCOM, Bharti, Vodafone, Spice (Idea), Aircel and Sistema Shyam (MTS) are not up to the bar.

Complaints per 100 bills issued - Aircel and Idea Cellular receive many complaints Percentage of complaints resolved within 4 weeks - Aircel is unable to resolve

complaints within the given timeframe in Andhra Pradesh

9. SIGNIFICANCE OF ARPU :

Decline in ARPU likely to accelerate in coming quarters as competition intensifies and subscriber additions happen mostly in semi-urban and rural areas

The Indian mobile services market is highly competitive with six to eight players operating in each of the 23 telecom circles. The competitive intensity has intensified further over the last few months following the launch of GSM services by RCom and Tata DoCoMo, CDMA services by Sistema Shyam; and the continuing pan-Indian rollout by Aircel, Idea and Vodafone. These players have introduced attractive schemes like per second billing (moving away from the industry norm of per minute billing) and aggressive tariff plans for local and STD calls to capture market share. The incumbents, facing a decline in subscriber additions, have also had to follow suit and reduce tariffs, which in turn has led to a decline in ARPU. This apart, the profitability of mobile service providers has also been impacted by the increasing share of low ARPU subscribers (from semi-urban and rural areas) in their total mobile subscriber base.

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10.ENHANCING PRODUCTIVITY:

Telecom being a technology driven Industry, it is essential for telcos to mature and enhance their Information Technology function from being just an enabler to a full blown IT service organisation that is instrumental in providing the required advantage to a telco in meeting the margin enhancement goals. This calls for telcos to design and implement frameworks that address aspects like strategy, design, transition, operations and improvement of IT services.

For ensuring the effectiveness of the initiatives that telecom companies are taking to manage their reducing margins, it is important to ensure the effectiveness of the IT Services supporting these initiatives. Telecom companies need to scale up the capability and maturity level of their IT Services from a business support function to a strategic function enabling the business to move up the telecom value chain..

An effective IT Service Management is seen as the need of the hour to manage the reducing margins which is one of the primary concerns that telecom companies are dealing with across the globe. While the increased competition in the Indian telecom industry will drive telecom operators to focus on various ways and means to seize the reducing margins, customers and partners will be closing watching how telecom companies improve their business process efficiencies

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Figure- Service Management Reducing Operating Cost

An effective IT Service Management revolves around the core practices of Service Lifecycle Management which include:

•Service Strategy– focuses on the identification of market opportunities for which services could be developed in order to meet a requirement on the part of internal or external customers

•Service Design – focuses on the activities that take place in order to develop the strategy into a design document which addresses all aspects of the proposed service, as well as the processes intended to support it

•Service Transition – focuses on the implementation of the output of the ser vice design activities and the creation of a production service or modification of an existing service

•Service Operations – focuses on the activities required to operate the ser vices and maintain their functionality as defined in the Service Level Agreements with the customers and

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•Continuous Service Improvement – focuses on the ability to deliver continual improvement to the quality of the services that the IT organisation delivers to the business

Outsourcing

Outsourcing provides significant leverage to companies that are burdened with activities that may or may not be their core business. Potential benefits from strategic outsourcing are reduction and control of operating and hardware costs, reduced time to market, acceleration of benefits from re-engineering, access to human capital and skill sets that may not be available locally, access to good practices, a knowledge base and sharing of risk.

In order to deal with the increasing competition, telecom operators are leaving the technology-related aspects of their business to external consult ants and are focusing upon providing new services to their customers. The potential of IT outsourcing in telecom was highlighted when Bharti Tele-Ventures signed a 10- year deal with IBM worth approximately USD 750 million. While outsourcing activities are catching on across many sectors in the country, the telecom segment, perhaps, comes across as the most lucrative of the lot. Some of the well-known outsourced service arrangement models in the telecom industry have been discussed here.

Infrastructure Sharing – Partnership among Competitors

Infrastructure Sharing is facilitating rapid rollouts of services, wider coverage and increasing affordability leading to market expansion. This is also facilitating operators for faster coverage of rural area and roll-out of services in a faster and we should incentivise infrastructure. Some of the direct potential benefits of infrastructure sharing are:

• Improvement in the quality of service through better coverage

• Improvement in the aesthetics of the landscape

• Reduction of the costs involved in infrastructure creation

• Faster roll-out of service and

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• Affordable tariffs for subscribers

But at the same time, some of the typical challenges associated with the management of shared infrastructure are:

• Capacity Management

• Relationship Management between tenants

• Sharing of operating costs

• Managing service levels

• Managing regulatory and legal obligations

• Capacity planning of the infrastructure and

• Infrastructure development to support proposed Value Added Services

Value-added service likely to develop into a significant revenue stream:

Mobile Value-Added Ser vices (VAS) are those services that are not part of the basic voice offer and are availed of separately by the end user. They are used as a tool for differentiation and allow the mobile operators to develop another stream of revenue. Mobile VAS currently accounts for just 9 percent of the telecom companies’ revenue in India and has tremendous potential for growth with the mobile subscriber base growing at a scorching pace. Operators are facing cutthroat competition and with the call rates in India being one of the cheapest in the world, the margins are very low. Therefore they are looking at VAS as the next wave for growth

As ARPUs decline and voice services get commoditised, the challenge for mobile service providers would be to retain customers, develop alternative revenue streams, and create a basis for brand/service differentiation. In the light of the changing dynamics of the Indian mobile services market (mainly because of increasing competition), value-added service (VAS) presents an opportunity to mobile service providers to augment their revenues and margins, as is corroborated by the experience of telecom players in the developed markets. Currently, the contribution of VAS to the total mobile revenues of Indian telecom operators is just 9-10%, which is significantly lower than the same of operators in the developed markets. The potential for VAS revenues appears all the more significant at the present juncture, given that India is set

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to introduce 3G, a standard that allows operators to offer users a wider range of more advances services.

Various aspects of efficiency have been considered in this context. They include,

Technical efficiency: involves getting the maximum (sustainable) productivity from the technology in use. Empirical evidence suggests that the productivity of any technology improves through good management policies and through exposure of the operator to a competitive stimulus, particularly the downward pressure on prices that prevails under competition.

Allocative efficiency: requires the use of inputs in such a combination that costs are minimized for producing any specific level of output. Allocative efficiency is of particular importance for products such as telecom services, which are used as final consumption goods as well as intermediate inputs for other products.

Dynamic efficiency: involves the telecom operator being responsive to growth and change in demand, installation of appropriate capacity, enhancing productivity over time, focusing on innovation through the introduction of new services and network modernization. A price mechanism consistent with dynamic efficiency would also promote technological progress and would ensure that investment is directed towards the most efficient activities or to those activities which are considered "most valuable".

 

A notable aspect of dynamic efficiency relates to bypass. This arises when the customer chooses an alternative supplier of the service (i.e. bypasses the initial supplier). This occurs in a competitive situation when the price charged by any supplier is higher than the cost of providing the service plus a reasonable commercial return.

Mobile Number Portability (MNP) – An opportunity in disguise?

With a recent TRAI mandate on the implementation of MNP, Indian mobile users may soon have the option to switch their ser vice providers without changing their mobile numbers. The introduction of MNP is likely to catalyze the existing competition in telecom sector in India and hence would compel the service providers to further improve their quality of service in order to retain existing customers and att ain new subscribers.

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Thus, MNP would trigger a new and ferocious battle for customers in the wireless world that may be fought not only through retail outlets, call centers, and customer service, but also through back-office operations and technology. A strong strategic and demand management is required to develop and maintain the existing infrastructure to meet the growing demand of service quality and diversity.

Telecom companies are apprehensive about how better service can be delivered and are wondering about the size of investment required to put systems in place to cut down the resulting ‘churn’ in their subscriber bases, due to the introduction of MNP. Some have argued that the costs involved in introducing MNP could lead to a significant increase in call tariffs. The rationale for mandating the implementation of MNP is to promote competition among wireless carriers, as well as to provide customers with greater choice and freedom in selecting carriers while maintaining their current wireless identity the telephone number. Critically, it also helps conserve the shrinking pool of telephone numbers available to wireless carriers. The implications of number portability are serious. The Indian wireless industry is already facing severe competition and that the introduction of MNP would divert resources from essential core business activities such as improving network quality and reach, improving customer service, and initiating new products and services. To manage competition telecom companies need to have a strong operational and strategic balance to cope with the situation

Safeguarding Income Streams to Enhance Efficiency

Achieving operational efficiency is one of the other fronts where telecom companies observe tremendous potential to manage their reducing margins. Margin enhancement, revenue assurance and cost management are becoming more important than ever before.

Mergers and Acquisitions – Acquiring Competition

The Indian telecom market is one of the fastest growing telecom markets in the world. With the stagnation of telecom market in the west, the Indian telecom market has magnetized foreign investors in the last one decade leading to a multitude of Mergers and Acquisitions (M&A) in the Indian telecom Industry. M&As have been a regular feature of Indian telecom Sector. The spurt in the M&A activity is also on account of convergence of telecom with other media and entertainment industries. The M&A are being seen in the market as part of a much needed consolidation in the fragmented industry, which would continue to see smaller regional mobile operators swallowed up by the big players in a push to cut cost and boost their market share.

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There are large number of technological and integration issues arising out of these mergers and acquisitions posing another operational challenge for the telecom operators. These include the identification of quality of the infrastructure assets, support, maintenance and upgrade of infrastructure, integration of billing systems, customer care systems and grievance systems

Services-Importance:

In the context of service, relationship marketing has been defined as attracting, maintaining and in multi-service organisations enhancing customer relationships . Here attracting customers is considered to be an intermediary step in the relationship building process with the ultimate objective of increasing loyalty of profitable customers. This is because of the applicability of the 80-20 rule. According to Market Line Associates, the top 20% of typical bank customers produce as much as 150% of overall profit, while the bottom 20% of customers drain about 50% from the bank's bottom line and the revenues from the rest just meeting their expenses. The following five strategies for practicing relationship marketing -

i. Developing a core service around which to build a customer relationship,

ii. Customizing the relationship to the individual customer,

iii Augmenting the core service with extra benefits,

iv. Pricing services to encourage customer loyalty,

v. Marketing to employees so that they will perform well for customers.

Developments in information technology, data warehousing and data mining have made it possible for firms to maintain a 1to1 relationship with their customers. Firms can now manage every single contact with the customer from account management personnel, call centers, interactive voice response systems, on-line dial-up applications, and websites to build lasting relationships. These interactions can be used to glean information and insights about customer needs and their buying behavior to design and develop services, which help create value for the customers as well as the firms.

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11.CONCLUSION:

To develop effective strategies and enhance productivity for businesses. It is essential for organizations to determine what combinations of factors are important to customers where, competitors are always ready to take over the loyal customers of one particular company. It is essential that goals and strategies must be aligned with organizations businesses where, an organization should access its strengths, weaknesses, opportunities and threats. Business organizations want higher productivity because they yield lower costs and help them to become more competitive and coming to that of the telecom sector the looming human capital crisis and tight budgets are driving the need for greater efficiency. Markets have become highly competitive due to the globalization and the consumers always expect a high level of service from government and private sectors. Finally, information technology is going to play a vital role in the coming future where information sharing and collaboration are key aspects for improving the efficiency and no one should ignore these even to a partial extent. The goal was to satisfy the customer expectations for service, quality and delivery

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Bibliography:

TRAI report on performance of telecom sector, 2008-2009 - Page 10,11,12.

Report of TRAI on Telecom Sector in India: Vision 2020

Investopedia – Page 7,8

Quarterly reports of companies :TRAI – Page 13

Report on Productivity enhancement in telecom sector: BCG report, KPMG Report

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